HSBC among big banks facing EU fixing charges

THE EUROPEAN Commission levelled charges of market manipulation against three banks yesterday, alleging that the groups acted to rig a major inter-bank lending rate.

HSBC, JP Morgan and Credit Agricole were named by the Commission, which said in a statement it believes that the banks were involved in fixing Euribor. The institutions held out last year when others settled with the EU and were collectively hit with €1.04bn (£846m) in penalties.

The four banks that made a deal last year had their fines reduced by 10 per cent, an offer which may not be extended to the groups pursued later on. Barclays was spared a fine for acting as the whistleblower to the EU authorities.

An HSBC spokesperson said they “intend to defend themselves vigorously”. According to the EU, once the banks have exercised their right to object to the allegations, it can impose a fine of up to a tenth of the bank’s worldwide annual turnover.

“Ever since those three banks became hold-outs from the settlement last year, it was a matter of time before the EU tried to force the situation,” said Ian Gordon of Investec. He suggested that the fines would be “in the low hundreds of millions” of euros for each bank, similar to those fines meted out to other banks at the end of last year.

Regulators are becoming more confident in their fines and holding out can be a disadvantage to banks, according to Gordon.

“However you measure it, there’s clear evidence of fine inflation – the cost of settlements creeps ever upwards – if you look back to 2012 it’s quite remarkable. In that context it may not have felt it at the time, but Barclays was quite smart to get ahead of the game.”

Share prices in all three banks dropped moderately during the day. Credit Agricole’s shares declined by 0.77 per cent, HSBC’s by 0.92 per cent, and JP Morgan’s by a shallower 0.2 per cent.